Sara is filing as head of household and has 2014 taxable income of $57,000 which includes $3,000 of net long-term capital gain.The net long-term capital gain is made up of $1,000 25% gain and $2,000 0%/15%/20% gain.What is the tax on her taxable income using the alternative tax method?

Question

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Sara's taxable income takes her out of the 15% regular tax bracket.Therefore,her $2,000 0%/15%/20% long-term capital gain is taxed at 15%,but her 25% gain is taxed at the regular tax rate since that is also 25%.Her tax on taxable income is $8,463 (the tax on $54,000 regular taxable income plus $1,000 25% net long-term capital gain at regular tax rates plus $2,000 at 15%).

Sara Is Filing as Head of Household and Has 2014